Hollywood is regularly taken to task for its depiction of business and entrepreneurs as greedy, opportunistic, and parasitic. Think Gordon Gecko as the corporate raider in Wall Street, or Jordan Belfort as the hard selling penny stock and Ponzi schemer in The Wolf of Wall Street.

Yet the movie industry is also sometimes nuanced in its approach to business. Perhaps no better example of this is the classic film It’s a Wonderful Life, now revered as one of the top 100 films ever made by the American Film Institute. When the film was released in 1946, it earned five Oscar nominations, including Best Picture and Best Director. While most people think of the film as a holiday movie extolling the virtues of honor, trust, and integrity, the movie’s plot also carries a sustained pro-capitalist but nuanced pro-business message.

Ironically, despite its current reputation, It’s a Wonderful Lifewas not initially intended to be a Christmas movie. Famed director Frank Capra told the Wall Street Journal in the 1980s that he “didn’t even think of it as a Christmas story” when he first ran across the story. “I just liked the idea.” He also was taken by the main theme of an “individual’s belief in himself” and producing a story that was an alternative to the “modern trend of atheism” in Hollywood at the time.

The free-market theme is also not obvious to most viewers. The principal antagonist is a greedy commercial banker, Henry Potter, who will do anything to make a profit. Not only is he a ruthless businessman, but Potter is condescending and elitist, dismissing the working man as lazy. Giving them mortgage debt creates “discontented, lazy, rabble instead of a thrifty working class,” he rants. Potter is the rapacious robber baron, and his villainy is the primary plot driver.

Potter’s nemesis, however, is not an anti-business crusader, a politician, an anti-trust reformer, or a pro-government social activist. On the contrary. The protagonist, George Bailey (played by Jimmy Stewart), is a businessman who recommits to the for-profit business model established by his father, justifying his decision in part on the need for competition. “This town needs this measly one-horse institution,” an impassioned George Bailey tells his bank’s board, “If only to have some place where people can come without crawling to Potter.”

More importantly, George is financially successful. He is a better businessman than his father, perhaps even better than Potter given the profit margins of a building and loan. He restores the family run community bank to profitability despite the drag of keeping his inept but well-meaning uncle on the payroll. Bailey Brothers’ does well enough it establishes Bailey Park, an innovative subdivision of homes targeted toward working-class families. Bailey’s bank competes successfully against Henry Potter’s low-rent apartments (slums), much to the commercial banker’s chagrin. In contemporary entrepreneurial parlance, Bailey Brothers would be considered a social enterprise, using its profits to address the social problem of substandard housing among a marginalized population.

In fact, the only way Potter can drive Bailey out of business is by resorting to fraud and government regulation. When George’s uncle inadvertently loses an $8,000 cash deposit, Potter discovers it. He deliberately keeps the money even though he knows the funds belong to Bailey Brothers’. Recognizing the lost funds put his competitor’s financial accounting out of balance, he reports Bailey Brothers’ to government regulators who instantly audit their business.

Bailey Brothers, however, is facing a cash-flow shortfall. It’s not insolvent based on the performance of its loan portfolio (and Potter knows this). Bailey Brother’s would likely become profitable again if it were allowed to renegotiate its agreements and debt to make up for the $8,000 loss. This point becomes clear in the closing scene when scores of the bank’s customers descend on George Bailey’s home to *loan him enough money to get through the crisis. Bailey doesn’t ask for, nor is he offered, a bailout.

Potter is taking tactical advantage of the regulatory process to use what is a short-term cash-flow management problem to eliminate his competition via government regulation that would not, or could not, recognize the underlying profitability of the enterprise.

It’s a Wonderful Life ends by making a prescient point about the relationship between ethics and good business practice. In a real market economy, Good Will counts. Unlike Potter, whose wealth gives him the resources and power to ignore and skirt conventional ethics, George Bailey finds that his compassionate, considered, and profitable practices ensure the long-term viability of his bank with a little help and understanding from his customers.

Thus, It’s a Wonderful Life is an allegory for compassionate capitalism.

Free-market advocates would do well to revisit Frank Capra’s classic movie through a new lens that focuses on its underlying free market message. While the pro-capitalist theme may not have been intended by Capra, or the screenwriters, the message is clear in the design of the plot, the development of the characters, and the economic setting of the screenplay. The fact it continues to rank high on audience and critics’ list of favorites bodes well for using popular media to trigger important discussions about the value of free competition, sound ethics, and the potential dangers of regulation to reduce industry competitiveness through the influence of well-connected private interests.